Telefónica to Implement Significant Job Cuts in Spain Through Voluntary Departure Plan

Agreement Reached on Workforce Reduction

Telefónica, the Spanish telecommunications giant, has finalized an agreement with major trade unions in Spain to implement a significant workforce reduction. The plan, known as an Expediente de Regulación de Empleo (ERE), will see the departure of 4,525 employees through a voluntary scheme. This move is part of the company's broader strategy to enhance operational efficiency and adapt to the evolving telecommunications market.

While the agreed number of departures stands at 4,525, Telefónica has provisioned approximately 2.5 billion euros before taxes to cover the costs associated with up to 5,500 employee exits. This figure represents nearly a quarter of the company's workforce in Spain, which was reported to be around 25,000 employees. The 4,525 agreed departures represent approximately 26% of the workforce in the directly affected subsidiaries.

Voluntary Departure Scheme and Timeline

The job cuts will be implemented through a voluntary departure plan, primarily targeting early retirement. However, the scheme is also open to younger employees who meet specific eligibility criteria and will receive indemnities. A key demand from the unions, including Comisiones Obreras (CCOO), Sumados-Fetico, and Unión General de Trabajadores (UGT), was to ensure the process remained strictly voluntary to avoid any 'traumatic' dismissals.

The application period for employees wishing to adhere to the voluntary plan is set to begin on December 29 for several subsidiaries, with the period for Movistar Plus+ starting on January 7. Employee exits are anticipated to commence in the first quarter of 2026.

Strategic Rationale and Financial Impact

This significant restructuring is a core component of Telefónica's new five-year strategic plan, dubbed 'Transform & Grow,' which was announced in November. The company aims to reduce debt, restructure operations, cut costs, and enhance overall operational efficiency. The objective is to foster a 'more digital' and 'more flexible' company capable of competing and growing in a rapidly transforming sector.

The estimated cost of the plan, approximately 2.5 billion euros before taxes, translates to an average of around 454,000 euros per employee. Telefónica projects that these job cuts will generate average annual direct cost savings of approximately 600 million euros from 2028 onwards. The company expects a positive impact on its cash generation starting in 2026.

Affected Divisions and Industry Context

The job reductions will impact several key areas within Telefónica's Spanish operations, including:

• Telefónica España
• Movistar Plus+ (the pay-TV arm)
• Various Group-level functions and corporate units such as Telefónica Global Solutions, Telefónica Innovación Digital, and Telefónica S.A.

This initiative comes amidst a challenging environment for European telecommunications operators, characterized by sluggish growth, increasing network investment costs, and intense competitive pressures. Telefónica had previously undertaken a similar restructuring program in 2024, which resulted in 3,421 job cuts in Spain.